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Asset specificity

Resources and capabilities | The business unit | The service unit | Type I (internal service provider) | Type II (shared services unit) | Type III (external service provider) | From value chains to value networks | Service systems | Fundamental aspects of strategy | The Four Ps of strategy |


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The more specialized an asset gets, the lower its usefulness for other purposes. A point-of-sale terminal has higher asset-specificity than a PC workstation or storage device that can be re-purposed. Asset specificity applies to organization and people assets as well. Type I providers who have never served more than one customer find it hard to adjust to corporate mergers and acquisitions.

When a tax collection agency decides to accept electronic filing of tax returns and electronic funds transfer (EFT), there is a significant change in its patterns of business activity. Consequently, some service providers, including the agency’s own internal units, have better access-based strategies than others to serve the agency. An insurance company offers to initiate the claims process at the site of an accident. It does so by dispatching claims handling staff to the accident site with all the resource s necessary for the claims process. This strategy not only provides distinctive value to its policyholders but also speeds processes and reduces administrative costs from lengthy cases. It puts an office-based clerical job out on the front-line in vehicles specially equipped with the necessary business applications. The insurance company itself adopts an access-based strategy to distinguish itself from competing insurers.

Other service provider s in turn may compete to win the business of this progressive insurer by offering mobile workplace services that automate and integrate the claims processing vehicles with back-office system s. Service providers with knowledge and experience in mobile systems and application s, similar to those used by emergency medical services, would have a distinctive advantage.

Service providers may adopt one or more of these generic types of positioning (Figure 3.29). There are no universal rules for these positioning strategies, simply plan s and patterns that work, or definitions to comply with. Concrete plans are required, however, to maintain strategic positions from which the mission and objective s are achieved. A sound position guides the organization in what to do and, just as important, in what not to do.

Figure 3.29 Combining variety-based, needs-based and access-based positioning

Once a position has been attained, here is a test:


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